Three Studies Debunk Tax Migration Myths
In recent years some have tried to link state tax policy and migration flows between states. Americans for Tax Reform (ATR) claims that in the late 1990's "migration flows began to accelerate as higher-income taxpayers and an aging population moved to lower-tax jurisdictions." ATR claims that the elderly and the higher income will basically move solely to take advantage of a state’s tax climate. A simplified version of their theory goes something like this: people living in the 41 states with broad based income taxes are in a great big hurry to move to states without income taxes like New Hampshire, Alaska, Florida, Nevada, Wyoming, Washington, South Dakota, Tennessee, and Texas.
On its surface this seems like a pretty silly argument. Do people really think about tax structures before they pick up and move to another state? Don't family relationships, job availability, climate and proximity to adequate health care impact migration more?
Three very interesting studies from the Iowa Policy Project, New Jersey Policy Perspective, and Policy Matters Ohio debunk the "tax structure causes moving" myths. If state legislators decide to cut taxes (or not increase taxes) in order to attract new residents they are making incredibly poor public policy decisions.
Policymakers concerned about their state's population growth, would be better off to invest in state parks, libraries, education, and health care instead of cutting taxes.